BPI Energy Signs Carbon Credit Marketing Agreement With Blue Source.

CLEVELAND -- BPI Energy Holdings, Inc. (NYSE Alternext US: BPG), an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, today announced that it has signed an agreement for the development, verification, registration and marketing of greenhouse gas emission reduction benefits (ERBs) with Blue Source, LLC, an aggregator and marketer of carbon credits.

The agreement contemplates a 10-year term and will commence with the registration and certification of ERBs from BPI Energy's existing CBM production portfolio. This procedure entails the monitoring and collection of relevant data required for documenting marketable ERBs at BPI's projects. An independent third party engaged by Blue Source will verify the ERB-creation activities, which will then be registered with a reputable North American registry, which will in turn be marketed by Blue Source/Goldman Sachs for the benefit of BPI Energy.

James G. Azlein, BPI's chairman, president and chief executive officer, commented: "We are very pleased to have reached this agreement with Blue Source--the leader in developing independently verified emission-reduction projects in North America."

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About BPI Energy

BPI Energy (BPI) is an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, which covers approximately 60,000 square miles in Illinois, southwestern Indiana and northwestern Kentucky. The Company controls a large CBM position in the Illinois Basin at approximately 534,280 acres.

News releases and other information on the Company are available on the Internet at:

http://www.bpi-energy.com or http://www.bpi-industries.com/newlibrary.htm?b=1320&1=1

About Blue Source, LLC

Blue Source offers businesses multiple approaches for reducing greenhouse gas emissions associated with climate change. Blue Source provides access to capital to fund project development, works with companies on developing projects and oversees production of long-term Verified Emission Reductions (VERs). Blue Source is a portfolio company of First Reserve Corporation, a leading private equity investor in the energy industry, who since 2006 has been a major equity partner in the company, and certain affiliated investment funds of Och-Ziff Capital Management Group LLC. Blue Source has offices in Salt Lake City, Utah; Calgary, Alberta; Houston; Denver, Colo.; Raleigh, N.C.; San Francisco; and New York.

Some of the statements contained in this report that are not historical facts, including statements containing the words "believes," "anticipates," "expects," "intends," "plans," "should," "may," "might," "continue" and "estimate" and similar words, constitute forward-looking statements under the federal securities laws. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or the conditions in our industry, on our properties or in the Basin, to be materially different from any future results, performance, achievements or conditions expressed or implied by such forward-looking statements. Some of the factors that could cause actual results or conditions to differ materially from our expectations, include, but are not limited to: (a) our inability to raise the funds necessary to satisfy our existing accounts payable and accrued liabilities; (b) a refusal by GasRock Capital LLC ("GasRock") to make any additional advances under the GasRock Credit Agreement, which are at GasRock's discretion; (c) our inability to repay or refinance the amounts advanced to us by GasRock when such amounts become due on Jan. 30, 2009; (d) a breach by us of a covenant under the GasRock Credit Agreement or other event of default that allows GasRock to accelerate our outstanding obligations; (e) our inability to obtain sufficient financing that would enable us to fund our future operations; (f) our failure to accurately forecast CBM production; (g) a decline in the prices that we receive for our CBM production; (h) our failure to accurately forecast operating and capital expenditures and capital needs due to rising costs or different drilling or production conditions in the field; (i) our inability to attract or retain qualified personnel with the requisite CBM or other experience; (j) unexpected economic and market conditions, in the general economy or the market for natural gas; (k) limitations imposed on us by the GasRock Credit Agreement; and (l) potential exposure to losses caused by our derivative contract. We caution readers not to place undue reliance on these forward-looking statements.